BN66 - Round 2 (Court of Appeal)

[SantaClaus]

Correct. They're claiming that the wording on the returns wasn't obvious enough.

hmmm, shouldn't they have claimed that 6 years ago, just like everything else.

[smalldog]

hmmm, shouldn't they have claimed that 6 years ago, just like everything else.

just get the wording retrospectively changed, simples....

[SantaClaus]

just get the wording retrospectively changed, simples....

Just a small matter of travelling the space-time continuum. What geniuses Her Majesty's Time Travellers are!

[Emigre]

Thank you CIOT

Call to ease retrospective tax fears :: Contractor UK

HM Revenue & Customs should tax people on the wording of legislation in place at the time of their actions, or take extreme care if it seeks retrospective changes.

Issuing this appeal, the Chartered Institute of Taxation said retrospective action damages confidence in the tax system and could therefore harm the economy.

Although still relatively rare, the introduction of tax rules with retrospective effect is a growing trend growing trend, the CIOT said, which the government should set boundaries for.

“We think it is important for the government to state clearly when, if at all, it will see retrospective action as valid,” the institute said in a paper handed to the coalition.

“It must be very sparingly used: retrospection is damaging to confidence in the tax system as it undermines the principles of stability and certainty.”

The state should adopt a “general principle of opposition” to retrospection, other than on the grounds of necessity, not desirability, and in “very limited circumstances.”

So while the government should not forbid it out it in all circumstances, retrospection is something “that should be used with extreme care and justified at length.”

“The government should make a clear statement of when, if at all, it sees retrospection as appropriate,” the CIOT said.

“The institute believes that this statement should be part of a new protocol on announcing legislative changes taking immediate effect outside fiscal events.”

Nov 26, 2010

[DonkeyRhubarb]

Full CIOT paper

Worth a read.

http://www.tax.org.uk/Resources/CIOT...OT%20Nov10.pdf

Quotes

Page 8, Point 7.4

We strongly objected to the recent Finance Act 2008 section 58, which changed the application of a double tax treaty going back 20 years[14]. Taxpayers had no warning of the apparent need for the change to the law. Quite the reverse: the HMRC manual had referred to the sort of planning which was being attacked since 1997. Whatever the rights and wrongs of the scheme, taxpayers and advisers could surely be forgiven for assuming its use was accepted – or, at any rate, not seen as warranting tackling with any urgency. In particular, there was never any indication of a need to clarify – or change – the 1987 law.[15]

[14] The legislation is currently being considered by the Courts in Huitson v HMRC [2010] EWHC 97. In our view the attack on the tax scheme undertaken by Robert Huitson, and other similar schemes, by retrospective legislation in this way was extreme and unjustified.
[15] For the avoidance of doubt, we had no objection to the change effected by s59 FA 2008, which blocked the effectiveness of the scheme prospectively: such action was only a surprise in that it had not happened already, given HMRC‟s knowledge of the arrangement.

[Emigre]

Worth a read.

http://www.tax.org.uk/Resources/CIOT...OT%20Nov10.pdf

Quotes

Page 8, Point 7.4

We strongly objected to the recent Finance Act 2008 section 58, which changed the application of a double tax treaty going back 20 years[14]. Taxpayers had no warning of the apparent need for the change to the law. Quite the reverse: the HMRC manual had referred to the sort of planning which was being attacked since 1997. Whatever the rights and wrongs of the scheme, taxpayers and advisers could surely be forgiven for assuming its use was accepted – or, at any rate, not seen as warranting tackling with any urgency. In particular, there was never any indication of a need to clarify – or change – the 1987 law.[15]

[14] The legislation is currently being considered by the Courts in Huitson v HMRC [2010] EWHC 97. In our view the attack on the tax scheme undertaken by Robert Huitson, and other similar schemes, by retrospective legislation in this way was extreme and unjustified.
[15] For the avoidance of doubt, we had no objection to the change effected by s59 FA 2008, which blocked the effectiveness of the scheme prospectively: such action was only a surprise in that it had not happened already, given HMRC‟s knowledge of the arrangement.

DR, the points raised in this CIOT paper are about as strong as they could possibly word them given that the Huitson LJs are in the process of making their decisions. Coming from the leading tax body in the UK it must surely leave some room for Appeal if the decision when it is handed down were to go against us.

Once again, thank you to the CIOT for what is an extremely clear and principled statement of reasons to outlaw retrospection. their summary of our plight is far more concisely and eloquently worded than I fear we have heard expressed in Court.

I suggest we pass this Paper to MP and Huitson's Counsel.

[zippo]

Worth a read.

http://www.tax.org.uk/Resources/CIOT...OT%20Nov10.pdf

Quotes

Page 8, Point 7.4

We strongly objected to the recent Finance Act 2008 section 58, which changed the application of a double tax treaty going back 20 years[14]. Taxpayers had no warning of the apparent need for the change to the law. Quite the reverse: the HMRC manual had referred to the sort of planning which was being attacked since 1997. Whatever the rights and wrongs of the scheme, taxpayers and advisers could surely be forgiven for assuming its use was accepted – or, at any rate, not seen as warranting tackling with any urgency. In particular, there was never any indication of a need to clarify – or change – the 1987 law.[15]

[14] The legislation is currently being considered by the Courts in Huitson v HMRC [2010] EWHC 97. In our view the attack on the tax scheme undertaken by Robert Huitson, and other similar schemes, by retrospective legislation in this way was extreme and unjustified.
[15] For the avoidance of doubt, we had no objection to the change effected by s59 FA 2008, which blocked the effectiveness of the scheme prospectively: such action was only a surprise in that it had not happened already, given HMRC‟s knowledge of the arrangement.

7.3
Accordingly, we strongly disagree with any suggestion that the fact that the Government is counteracting perceived avoidance justifies a harsher treatment involving retrospective taxation. Although such action may appear to a Minister as a justified attack on a particular scheme, it is seen by outsiders, particularly overseas investors, as the Government changing the rules after the event and raises concerns that such action could happen anywhere.

[Overwhelmed]

What is also interesting to me is the timing of the CIOT paper, could it be that their Lordships have asked the COIT for an opinion?

[Buzby]

Good timing

Worth a read.

http://www.tax.org.uk/Resources/CIOT...OT%20Nov10.pdf

Quotes

Page 8, Point 7.4

We strongly objected to the recent Finance Act 2008 section 58, which changed the application of a double tax treaty going back 20 years[14]. Taxpayers had no warning of the apparent need for the change to the law. Quite the reverse: the HMRC manual had referred to the sort of planning which was being attacked since 1997. Whatever the rights and wrongs of the scheme, taxpayers and advisers could surely be forgiven for assuming its use was accepted – or, at any rate, not seen as warranting tackling with any urgency. In particular, there was never any indication of a need to clarify – or change – the 1987 law.[15]

...

probably shouldn't read anything into this, but the timing could be good for us while the Judges deliberating.

Good to get this on a Friday as well.

[futurecat]

What is also interesting to me is the timing of the CIOT paper, could it be that their Lordships have asked the COIT for an opinion?

Could this be sent to Huitsons Brief and also to the Judges presiding over our appeal? Donkey, you seem to be the man with the contacts?